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Key Events This Week: All Eyes On Jackson Hole

Courtesy of ZeroHedge View original post here.

After the most harrowing week for both stock and bond markets of 2019, expectations for a quiet, mid-summer week will be quashed and gyrations in both rates and risk assets will continue with the annual Fed Jackson Hole event front and center on Friday. We’ll  also get the latest FOMC meeting minutes to digest while the global growth pulse will  be assessed in light of the flash PMIs. Italy will also be under the spotlight with PM Conte due to address the Senate while of course markets will be hugely sensitive to further trade developments, according to DB’s Craig Nicol.

The highlight of the week will be the annual central bank fest in Jackson Hole, Wyoming: with the sharp repricing in the bond market in recent weeks, including a brief inversion of the 2s10s curve, markets will be paying close attention to the annual Federal Reserve policy symposium. The event officially gets underway on Thursday and continues into Saturday however comments from Fed Chair Powell aren’t due until 10am EST/3pm BST on Friday. The official agenda is still yet to be released however we do know that the theme of this year’s event is a fairly vague “Challenges for Monetary Policy”.

Markets are now pricing 61bps of cuts by the end of this year from the Fed and the best part of a further 50bps of cuts in 2020. So will Powell be sufficiently dovish to pivot more aggressively towards market pricing? Or will the market be left disappointed as fears of a global recession build?

Speaking of the Fed, on Wednesday we’ll get the minutes of the FOMC meeting from July. A reminder that while the Fed cut by 25bps at the meeting, this included dissents from two regional Fed presidents. The market was also left somewhat disappointed by Powell’s reference to a “mid-cycle adjustment to policy” and that the cut was not the “beginning of a lengthy cutting cycle”. So it’ll be interesting to see what the text from the minutes throws up.

As for Fedspeak, it remains quiet with only Boston Fed President Rosengren due to speak on Monday when he discusses the economy in an interview with Bloomberg. Fed Vice-Chair for Supervision Quarles is due to speak on Tuesday albeit at an event on Community Development.

In terms of data, the main focus will likely be the flash August PMIs on Thursday. We’ll get the data for Japan, Europe and the US. A reminder that the manufacturing PMI for the Euro Area slipped further into contractionary territory last month, to 46.5. That was incredibly the 17th time in the last 19 months that the PMI has deteriorated. The services PMI also  deteriorated to 53.2 however it still remains 2pts above the lows of the start of this year. Still, the composite nudged down to 51.5 and reversed the improvement in June.

The rest of the data calendar is quiet. In the US we’ll get July existing home sales on Wednesday, the latest weekly jobless claims reading and August Kansas Fed survey on Thursday, and July new home sales on Friday.

In Europe we’ll also get the final July CPI revisions on Monday as well as the ECB minutes of the July policy meeting on Thursday while in Japan July trade data on Monday and July CPI data on Friday are also scheduled.

The key global events this week are summarized below.

Another potentially market sensitive event to watch next week is Italian PM Conte addressing the Senate in Rome on Tuesday. This could potentially lead to a confidence vote however it’s not necessarily expected to take place on the same  day.

Finally, other things to potentially watch for next week include French President Macron and Russian President Putin meeting on Monday, the EIA crude oil inventory report on Wednesday and Bank of Indonesia rate decision on Thursday.

Summary of key events this week, courtesy of Deutsche Bank

  • Monday: Data releases include August house price data in the UK and July trade data in Japan overnight, before the final July CPI revisions are made for the Euro Area. Away from that the Fed’s Rosengren is expected to speak, while French  President Macron and Russian President Putin are due to meet.
  • Tuesday: A quiet day for data with July PPI in Germany and August CBI survey data in the UK the only releases due. Italian PM Conte is expected to address the Senate in Rome while the Fed’s Quarles is due to speak.
  • Wednesday: The July FOMC meeting minutes are due to be released in the evening. Prior to that, data includes July public sector net borrowing stats in the UK and July existing home sales in the US. The EIA crude oil inventory report is also due to be released.
  • Thursday: The annual Jackson Hole central banking symposium kicks off, continuing into the weekend. As for data, the  highlight will likely be the flash August PMIs in Europe, the US and Japan. We’ll also get August CBI survey data in the UK, August consumer confidence for the Euro Area and the latest jobless claims, August leading index and August Kansas Fed survey data in the US. The latest ECB meeting minutes will also be released while a monetary policy meeting is scheduled in Indonesia.
  • Friday: Fed Chair Powell is due to speak at Jackson Hole. As for data, July CPI in Japan and July new home sales in the US are scheduled.

Finally looking at just the US, courtesy of Goldman, there are several scheduled speaking engagements from Fed officials this week, including a speech by Fed Chair Jerome Powell on Friday at the Jackson Hole Economic Policy Symposium. In addition, minutes from the July FOMC meeting will be released on Wednesday.

Monday, August 19

  • There are no major economic data releases scheduled today.

Tuesday, August 20

  • 6:00 PM Fed Vice Chairman for Supervision Quarles (FOMC voter) speaks: Fed Vice Chair for Supervision Randal Quarles will give a speech on community development in Salt Lake City. Prepared text is expected.

Wednesday, August 21

  • 10:00 AM Existing home sales, July (GS +3.0%, consensus +2.3%, last -1.7%): After declining by 1.7% in June, we estimate that existing home sales rose 3.0% in July. Existing home sales are an input into the brokers’ commissions component of residential investment in the GDP report.
  • 2:00 PM Minutes from the July 30-31 FOMC meeting: At its July meeting, the FOMC lowered the funds rate target to 2-2.25%, as widely expected. The statement slightly watered down the “will act as appropriate” policy guidance, and also replaced the phrase “closely monitor” with “continue to monitor” in reference to incoming information about the outlook. In the minutes, we will look for further discussion of the path of the policy rate and the growth and inflation outlook.

Thursday, August 22

  • 08:30 AM Initial jobless claims, week ended August 17 (GS 220, consensus 216k, last 220k)
  • 08:30 AM Continuing jobless claims, week ended August 10 (last 1,726k): We estimate jobless claims remained flat at 220k in the week ended August 17, after increasing by 9k in the prior week.

Friday, August 23

  • 10:00 AM Fed Chair Powell (FOMC voter) speaks: Federal Reserve Chair Jerome Powell will deliver a speech at the Kansas City Federal Reserve Bank’s annual Economic Symposium in Jackson Hole. The topic of the conference this year is “Challenges for Monetary Policy.” Prepared text is expected.
  • 10:00 AM New home sales, July (GS -0.2%, consensus -0.4%, last +7.0%): We estimate that new home sales edged 0.2% lower as mortgage loan applications declined.

Source: Deutsche Bank, Goldman, BofA


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